Daily Analysis

I maintain a bullish bias for the equity market since in my opinion the odds
are very large that SPX has not completed the EWP from the October 4 low,
therefore as long as price does not break the critical pivot support at 1357
I am expecting a wave (5) up. This final wave will establish an intermediate
top.

If this scenario plays out then it will then it will require some time to
be accomplished. I will be looking for an ending pattern once we get determining
factors such as extreme AAII bullish readings and overbought market breadth
indicators.

As a proxy of the market breadth I will monitor the weekly stochastic of the
Summation Index. As I have already mentioned in several updates once a weekly
buy signal is triggered, usually it remains in force several weeks until it
reaches the overbought zone and a new sell signal can be expected.

A likely pending wave (C) up of the EUR is one of the major arguments that,
if it pans out, will strengthen my preferred bullish scenario for the equity
market.

It is unquestionable that price is unfolding a corrective pattern from the
February top, and then the logical conclusion is that there is a pending wave
(C) up from the January lows. It could be a large one if price satisfies the
equality-projected target, although price will find a major obstacle once/if
it reaches the 200 dMA that today stands at 1.3450.

We are dealing with corrective EWP hence it is tough to marry a particular
count.

I have been working with a complex Triple ZZ, but maybe the EWP could be as
simple as a Descending Triangle. If this is the case then price would be now
involved in a down leg that will establish an intermediate bottom from where
to launch the assumed wave (C) up. At the moment it is only a "nice project",
but worth to be monitored.

If this pattern plays out, it will probably need at least one week to be completed,
then the lagging European equity market could play some catch up and the Spanish
IBEX could even outperform; it is the time to monitor for reversal patterns
of B. Santander & BBV.

Therefore I have the two requirements that MUST be fulfilled in order to maintain
the bullish bias:

The EUR has to establish a bottom

SPX has to remain above 1358

Regarding the SPX short-term EWP I have to admit that it is still "up in the
air", in other words I am clueless.

But I have 2 potential projects, either an Ending Diagonal or larger corrective
pattern that could unfold a Triangle.

We have to wait and see how price behaves if today there is more follow through
to the down side once it reaches a cluster of support in the range 1387-1385
(0.5 retracement, 50 dMA & 20 dMA) or the 0.618 retracement at 1380.

Yesterday's candlestick forebodes more down side action for today, but also
the pending weekly one does not inspire too many bullish vibrations. Recall
the importance of the 10 w MA = 1388, being above or below it (eow print)
may dictate over a quick bullish resolution or a more time consuming one.

My goal is to establish the most likely path that the price of a particular
asset will undertake and profit through ETF instruments both on the long and
short side and mainly with leveraged ones (2 x & 3 x).

Therefore the main purpose of TWT will be to establish investment strategies
regardless if the market is in an up trend or in a down trend, leveraging
the chosen scenario while managing the risk by establishing protective stop
losses.

Hence I will always define the risk, I will try to let winners run the wave
and I will cut the losses if my strategy is wrong.

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